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How To Negotiate A Commercial Lease That Favors You As A Renter

Commercial Space Toronto Blog

How To Negotiate A Commercial Lease That Favors You As A Renter

You probably have a business idea that you have been toying around with in your head for the last few months but now feel you need to make the dream a reality. When you decide on what business you want to invest in, the next step is to get an ideal location that will work for your business. You can either choose to buy a commercial property or get an office space for lease in Toronto. Check online for a company that has the best experience on leasing, renting and buying commercial properties to help you locate an ideal location.

Always ensure that the location you choose works for your business and that you are able to cover the cost of rent with ease. The next step is to meet with the landlord to agree on a lease agreement. The landlord presents you with a lease that favors him. You should always read the lease without haste and if you don’t understand any of the terms used, you can ask your lawyer to clarify them for you. If you don’t agree to all the terms the landlord has set, you can negotiate with him and come up with a lease that favors you. Here are some of the tips on how you can negotiate a lease agreement that favors you.

Lease term

The first thing you should always work out with the landlord is the length of the lease. Most landlords prefer tenants who are willing to sign longer lease terms. However, as a new business owner, it is wise to agree on a shorter lease term that you can renew later on. During this time, you will find out if the location you picked is ideal for the business or not and whether you need to stay or look for a new location.

Some business owners plan to carry out a project for a specified term so they need to agree on a lease term that will favor their special case. If you are sure that you have the right location and you are sure to do well in your ideal location, then you can go ahead and sign for a longer lease term. When you negotiate for a longer lease term, it gives you an advantage of negotiating on other incentives as well.

Cost of the lease

Lower cost

You should look at several listings on commercial property before settling to one. This helps you to have an idea of how much rent you are required to pay for the kind of space you wish to acquire. Get to know the monthly rent of your property and whether that will work for your business. Most lease agreements require a new tenant to pay some security deposit upfront that is refundable when you need to move out.

Get to know the details about how payments are done on the security fund when you need to relocate. Most lease agreements state that a landlord will increase rent after a certain amount of time so you need to know exactly when that will happen. You can negotiate on the percentage of increase to ensure that you are able to afford the rent.

Check the lease for hidden costs

If your lease gives a general lease price, you need to ask for a breakdown. Most landlords pass upkeep and maintenance costs to tenants and you need to find out if this is the case. Find out if you need to share utility costs with other renters or you have separate utility meters. You can negotiate with your landlord to allow you to pay a slightly higher amount of rent and in turn he pays for all other additional costs. Ensure that all these additional costs will not affect your business operational costs.

Ask to add clauses that favor you

You can ask your landlord to add a sublease clause in case you need to relocate to another location or close the business. If the main reason you chose the location of your business is because there is a bigger business that will favor you and drive sales your way, you can include a co-tenancy clause that allows you terminate your lease agreement if the bigger business (Anchor tenant) happens to leave. You can negotiate with your landlord not to allow any other similar business in his premise and ensure you have that clause added in writing.

Agree on a right of first offer

Every business person dreams of his business growing big and being able to expand. If you have a big vision for your business, you can agree to the right of first offer with your landlord. This clause requires your landlord to inform you of any additional space within his premises before advertising to third parties. You can then choose whether to take the space or not.

Posted 2017-11-21T18:42:07+00:00 Sep 15 2017 By inBlogwith0 Comments